Welcome to the age of intelligent machines and connected everything. It is a whole new world of consumerism, exploding data and devices, exponentially increasing complexity, and compliance and legal risks driven by data breaches and exposures. The customer voice and business processes now travel at the speed of light. Unpredictability and variety, driven by these evolving consumer and process dynamics found in every area of our daily lives, are the new reality. These driving forces of unpredictability are also rapidly changing new knowledge and insights, human judgment, analysis, elasticity, and the half-life of decisions and intellectual property. To keep customers engaged, educated, and entertained in this environment, business processes need to be executed in continuous real-time in response to rapidly changing customer sentiments and trends.
Moreover, business processes are the central nervous system of the 21st century enterprise. Continuing budgetary and competitive pressures to reduce costs, increase customer experience and engagement, increase operational efficiencies by reducing friction and waste, and increasing pressure to substantially growth their revenue streams have traditionally motivated decision makers in government, business and other organizations to automate their business processes. Computers and other related technology pervade modern business enterprises as well as other organizations. Companies have invested heavily in business process management systems and static dashboards to optimize their operations for a perfect one-way stream: the line of production. Enterprises immensely benefited from optimized processes within command-and-control structures. Over time, business processes have been standardized, outsourced, off-shored, in-sourced, shared, re-out-sourced, and even sometimes ignored, primarily to reduce costs. Today businesses rely on a plurality of performance data derived from traditional data sources like enterprise resource planning (ERP) software, enterprise data warehouses (EDWs), web clickstreams, customer relationship management (CRM) software as well as spreadsheets and other data files. Unfortunately, the gap between the rate at which the data is available and the ability of a business user to make sense of this data is growing rapidly. Moreover, each system provides information on different aspects of a business operation and this information is spread across the organization. Hence, business professionals must expend a large amount of time and energy to consolidate and digest great quantities of data to determine what is important to its business and its future goals or they need to acquire specialized skills to process large volumes of data to make sense out these data.
To solve these problems, management practitioners introduced balanced score cards, key performance indicators (KPIs) to assist executives and decision makers to keep track of the pulse of business and act quickly to take advantage of opportunities to propel business forward toward established goals and objectives. Key Performance Indicators (KPIs) are customizable business metrics utilized to present the status and trends in an organization in an easily cognizable manner. Once a business or other organization defines its mission or objectives, KPIs can be employed to measure progress toward those objectives. In general, each KPI can have a target value and an actual value. The target value represents a quantitative goal or objective that is considered critical to the success of a business or organization. The target value can change over time but is for the most part a stable value. The actual value is the value that fluctuates often based on the actions and performance of a business. Actual values can be compared to target values to determine a business' health or progress toward the target value. KPIs, if properly defined and implemented, provides very powerful tool for business users that they provide a clear description of organizational goals, distill large volumes of data down to a single value that can be utilized to continuously measure business performance and anticipates any trend shifting patterns well in advance or see organization progress toward organization benchmarks.
In actual use, however, the KPIs, its use and its value have been dumbed down in ways that diminish the quality of intelligence we gain from using business analytics. First is the vague and contradictory ways in which the term is applied by technology providers and practitioners. The second issue has to do with the performance part of KPI, which should show how an organization or any of its business processes measures up to expected outcomes. Ideally, upon viewing performance-related metrics or indicators, within seconds an individual should be able to determine what, if any, action should be taken to improve performance, such as discovering what is contributing to the subpar performance or identifying opportunities for improvement. This root-cause level of actions requires examination of different classes of metrics related to performance and can range from people and processes to customers or risk. Understanding the cause and effect of metrics requires knowing and presenting the process and interconnects of how a business operates. Unfortunately most business analytics software merely provides a table of data with no insight on what metric is contributing to the issue. Finally, businesses focused on building point solutions identifying and measuring metrics to monitor and understand enterprise performance, operational efficacy, customer experience, market, customer segmentations to guide their sales and service strategies. As result the power of KPIs to discovering the causal relationships and discovering the new relationships are lost due to fragmented data, complexity of understanding, and specialized skills needed to make sense of data.